New York City Comptroller Liu Defends Campaign

Comptroller Moves Ahead With Mayoral Bid After Convictions of Ex-Associates

By

Michael Howard Saul and

Sean Gardiner

May 3, 2013 9:49 p.m. ET

New York City Comptroller
John Liu
returned to the campaign trail sounding defiant one day after a federal jury convicted two former associates on campaign-finance fraud charges, declaring Friday he has run his campaign with integrity and that his bid for mayor remains viable.

Mr. Liu said he believed in the innocence of Jia "Jenny" Hou, his 26-year-old former campaign treasurer, who was convicted of attempted wire fraud, obstruction of justice and making false statements to federal law-enforcement agents. He didn't defend another one-time associate, Xing Wu "Oliver" Pan, a fundraiser, who was convicted of conspiring to commit wire fraud and attempted wire fraud.

"I have every confidence that my campaign was conducted and continues to be conducted appropriately and above board," Mr. Liu said during an impromptu news conference at a campaign stop in the Bronx.

"The people of New York City will decide for themselves who they want as mayor, who they want to take the City of New York into the future and who's got the best background to do the job and to do the job right," Mr. Liu said. "I hope that I will be that person."

The comptroller, who aspires to be the city's first Asian-American chief executive, said he didn't know whether federal investigators are continuing to pursue him. But he said he welcomed them to probe further.

"They can continue to tap my cellphone if they want," Mr. Liu said. "If they have the patience to keep digging, they're certainly welcome to keep digging. At the end of the day, they're not going to find anything because there is nothing to find."

A spokeswoman for the U.S. Attorney's Office for the Southern District of New York declined to comment on whether the investigation into Mr. Liu and his campaign was continuing. She also declined to respond to Mr. Liu's remarks.

On Friday, most of Mr. Liu's rivals for mayor declined to comment about the legal situation surrounding Mr. Liu's campaign.

One mayoral hopeful, former City Council Member Sal Albanese, a Democrat who is polling lower than Mr. Liu, urged the comptroller to drop out of the race.

"With all of the corruption headlines in the past few weeks, it's only going to make voters more cynical to have a mayoral candidate with a cloud hanging over his head," Mr. Albanese said.

Federal investigators arrested Mr. Pan in the fall of 2011 and months later Ms. Hou, on charges that they participated in an illegal scheme to funnel thousands of dollars to Mr. Liu's campaign.

Mr. Pan and Ms. Hou denied wrongdoing and are exploring an appeal of the jury's verdict, according to their attorneys.

The comptroller was never charged, but at the trial a federal prosecutor alleged he had to have known of the fraud charged in the case.

During a fundraiser in August 2011, Mr. Pan introduced Mr. Liu to an undercover federal agent—who was posing as a businessman—and told Mr. Liu that the fundraiser was "his event," referring to the agent. Prosecutors described that remark as a "code" signifying the illegal activity.

On Friday, Mr. Liu denied there was any code word.

"We have had hundreds of fundraisers where, you know, if Michael's going to have an event for us, it's Michael's event. If Courtney wants to host an event, we call it Courtney's event," he said. "The suggestion that there's any code word or code language taking place here is absolutely scurrilous."

While Mr. Liu defended Ms. Hou, he said she erred when she offered to reimburse a former boyfriend for a campaign donation. The former boyfriend never made the contribution, but Mr. Liu called the offer a "serious lapse in judgment."

Mr. Liu said his former press secretary, Sharon Lee, also erred when she offered to reimburse several friends and family members for donations to the campaign.

Those donations never occurred, Ms. Lee was never charged with a crime, and it was unclear whether prosecutors were considering filing charges following her testimony at trial.

Ms. Lee continues to work on Mr. Liu's campaign.

"I don't intend to fire Sharon and I hope that she will always be part of my team," Mr. Liu said, when asked why he's keeping her. "I think she's learned a painful lesson from all of this and that will help her be a better public servant going forward."

Of the more than $3 million he has raised for his campaign, Mr. Liu said, federal investigators found a "few thousand dollars of what appeared to be straw donors," a term that refers to contributors who are illegally reimbursed.

"In the grand scheme of things," Mr. Liu said he thought his campaign did a good job.

On Friday afternoon, Mr. Liu shook hands, kissed cheeks and waved his hand at potential voters who were gathered for a Cinco de Mayo celebration in the Mott Haven section of the Bronx.

Juan Tavarez, 45, an organizer of the event, said he was unaware of the details of the federal investigation.

"He's a great person and he's doing great things for the community," he said of Mr. Liu, adding he didn't know who would win his vote for mayor.

The media throng surrounding Mr. Liu created a bit of a spectacle, and Mr. Liu said he thought he was benefiting from what he described as the "worst publicity anybody could ask for."

"Believe it or not," Mr. Liu said, "the more [media] coverage I get…with regard to this particular issue, the more people come up to me on the street and say, 'Chin up. Hang in there. We're with you. We're behind you 100%.'"

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